Choices: Litigate now, litigate later, or . . .

  Niagara Falls, Ontario,
Friday, June 16, 2006
by: Joe Hueglin

The article Softwood lumber draft plan hits snag was a gross understatement, not one snag had developed but many in finalizing the Canadian-American Softwood Lumber Agreement.

Romeo St. Martin assessment, Softwood talks go down to the wire, was accurate - the time has passed because of the snags to introduce the ways and means motion for a vote necessary for the Agreement to be in place before the House breaks for the summer so immediate political pressure is off.

According to Harper defends lumber deal with U.S. as disagreements delay final package the Prime Minister contended "This is a good deal for our softwood industry, a good deal for Canada," Harper said. "It's why a vast majority of the industry supports it. It's why the provinces support it."

B.C. Forests Minister Rich Coleman, however, was quoted as saying "It doesn't matter to me whether it takes a week, 10 days, or two weeks. We are [going to get] our language." in U.S. must give on softwood

deal, B.C. says while "Ontario Natural Resources Minister David Ramsay said his province is worried because the United States is pushing for a mechanism to solve future timber disputes that would contradict the North American free-trade agreement" and so Ontario lobbies to change lumber deal
Is it so that Harper feels heat on softwood ? If not, he should be. "To express their concerns, at least 80 Canadian lumber companies filed suits in a U.S. Court of International Trade case over the last two weeks. As no deal can be ratified unless all suits are withdrawn, companies say they are protecting their interests should Canada sign a deal they do not support." As well, as reported in Mill startup date unknown ,the price of lumber is falling toward the figure where export tax cuts in under the Agreement as written.
American lumber interests continue to be protected whether the Agreement is signed or not. Their $500 000 000.00 U.S. is assured should there be final agreement. If not their Canadian competitors will continue to pay duties, to be raise to 14.7 per cent from 10.8 per cent according to US raises softwood duties.
Softwood talks hit impasse suggests "the removal of a legislative deadline means talks would resume on a more reasonable, less pressurized basis." Less pressurized at the moment because the political value of signing the deal when President and Prime Minister meet next month has been lost.
Gone for now, yes, but as the increase in duties comes nearer and should prices continue to fall, pressure will build within Canada to press forward with litigation of the United States challenge to the March 17, 2006 NAFTA PANEL affirmation that Canadian softwood lumber is not subsidized .
The Prime Minister will face the problem of deciding which course of action to take, pressing for talks in the face of all the snags or ending them and litigating.
Reality is the terms of the NAFTA Agreement dispute settlement mechanism at some point in the future will have to be litigated to a conclusion. Once successful in circumventing it through the Canadian-American Softwood Lumber Agreement the precedent will have been set as the standard operating procedure of the Americans.

In his defence of the Agreement Monday "International Trade Minister David Emerson told the House that the alternative to this agreement is more costly trade litigation and continued punitive U.S. duties that are damaging the forest industry." The long range perspective, if the NAFTA is to be upheld by the Prime Minister, is Canada accepting the costs of finishing the current litigation before NAFTA panels now in its final stages or starting again from the beginning on some future issue.

There is of course another alternate completely, accepting as the norm the pattern being currently set on the softwood dispute, ignore NAFTA and accept terms set by the Americans.


Joe Hueglin


Mertl, Steve, Softwood lumber draft plan hits snag, (pdf) June 12, 2006, Canadian Press, Toronto Star


St. Martin, Romeo, Softwood talks go down to the wire, June 12, 2006, PoliticsWatch


Mertl, Steve, Harper defends lumber deal with U.S. as disagreements delay final package, June 12, 2006, Macleans


Hamilton, Gordon and O'Neill, Peter, U.S. must give on softwood deal, B.C. says, (pdf) June 13, 2006, Vancouver Sun


Toronto Globe and Mail, Ontario lobbies on lumber, (pdf) June 12, 2006, Toronto Globe and Mail


CanWest News Service, Harper feels heat on softwood, (pdf) June 12, 2006, Times Colonist


Zimmerman, Sarah A., Mill startup date unknown, (pdf) June 14, 2006, Terrace Standard


Canadian Press, U.S. raises softwood duties, (pdf) June 14, 2006, Toronto Globe and Mail


Toronto Star, Softwood talks hit impasse, (pdf) June 14, 2006, Toronto Star


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